October 2008
Metro Denver job market stable despite national financial market woes
Despite nationwide financial turmoil, Colorado’s job growth measured 1.6 percent through August, while the national average growth rate totaled 0.2 percent, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for October 2008.
Metro Denver employers added 3,800 jobs between July and August. The gain reflected a typical seasonal trend and included jobs added in professional and business services, education and health services, and three of the remaining eight industry supersectors. On a year-to-date basis, each of Metro Denver’s 11 industry supersectors has added jobs except manufacturing and financial services, where job losses through August measured 1.1 percent and 2.1 percent, respectively.
The education and health services industry is Metro Denver’s fastest growing so far this year (+4 percent year-to-date), followed by leisure and hospitality (+2.7 percent), and professional and business services (+2.5 percent). Overall, Metro Denver job growth totaled 1.5 percent through the eight months ending in August.
Metro Denver employers’ hiring outlook remained stable between the third and fourth quarters of 2008. According to the Manpower Employment Outlook Survey, the share of Denver area employers planning to hire in the fourth quarter remained unchanged from the third quarter at 32 percent. On a year-to-date basis, an average of 28 percent of Denver area employers planned to add jobs, compared to 33 percent for 2007. The hiring outlook was slightly stronger in Boulder County, where the share of employers planning to add jobs rose from 20 percent in the third quarter to 33 percent in the fourth quarter.
Now that congress has approved a financial stabilization package, many consumers and businesses are wondering how quickly the markets will improve. While many housing markets nationwide remain distressed, others – including the market in Metro Denver – are showing signs of improvement. Because many of the assets currently burdening markets are tied to failing mortgages, financial stability relies heavily on more stable home prices and sales.
“Metro Denver home sales remain sluggish and home prices are still below year-ago levels, but foreclosure activity is slowing noticeably,” stated Patty Silverstein, chief economist for the Metro Denver EDC. “The local jurisdictions are still reporting foreclosures, but the market appears to be stabilizing.”
Metro Denver’s foreclosure filings declined dramatically between July and August. Filings in each of the seven counties fell anywhere from 35.7 percent in Adams County to 68.5 percent in the City and County of Denver, and Metro Denver’s total foreclosure count through the first eight months of 2008 declined 1.7 percent from the same months of 2007.
While Metro Denver is part of the West, its home price trends starkly contrast with those of many other western metros. According to the July S&P/Case-Shiller Home Price Indices, for example, annual depreciation levels remain near 30 percent in Las Vegas, Los Angeles, and Phoenix. The Denver index showed annual depreciation of 4.7 percent in July, and the index was one of five to report consistent gains over the past several months.
These more positive indicators suggest the framework for stable housing markets could be in place, but potential homebuyers still need access to affordable financing before residential real estate truly rebounds. The interdependent nature of housing and financial markets means that recovery will not be instantaneous. However, a midyear report by the Genesis Group suggests the credit crisis will quicken what would have been a slower decline for Metro Denver’s housing market. Market fundamentals – including home prices, inventory, and job growth – are already stronger in Metro Denver than they are nationwide, and the report predicts the local market will be one of the first to improve in 2009.
Recent economic indicators for Metro Denver reflect the uncertainty and lack of confidence in the national economy. Stock market indicators are broadly negative and Metro Denver’s commercial real estate market has lost some momentum. On a positive note, the pace of foreclosures is slowing and the local job market is relatively stable. Overall, five of 18 indicators showed positive trends for the month, compared to 10 indicators in the previous report. Five of the 18 indicators moved in a positive annual direction, compared to four indicators in the last report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.